The city of Federal Way may have to find ways to tighten its belt as it prepares for the 2019-20 biennium budget.
Finance director Ade Ariwoola told the City Council on Tuesday night that the city may be looking at a million-dollar deficit for 2019 as expenses continue to rise.
The potential cost increases the city faces in 2019 include a 15 percent hike in health insurance costs; pay increases resulting from contract negotiations with the Teamsters and Guild unions; and the hiring of five new police officers later this year.
Last fall, the city was awarded a COPS grant to help pay for the salaries of five new officers. The city must cover about 40 percent of the officers’ pay (about $200,000 a year) for the three-year life of the grant. After that, the city will need to pay the full cost of the salaries, or about $500,000.
Earlier this year, the council authorized the borrowing of $300,000 from reserves to cover an approximately $850,000 shortfall.
“If we are using the fund balance to balance 2018, there is a very good chance we will have to borrow money again to balance 2019,” Ariwoola told the council.
In order to pay back the money that is being borrowed from reserves, the City Council on March 20 voted 5-2 to impose a 7.75-percent utility tax on Lakehaven Water and Sewer District customers. Lakehaven has filed a lawsuit challenging the city’s authority to collect the tax.
Mayor Jim Ferrell told the City Council on Tuesday that the proposed budget he presents on Sept. 4 will be balanced and will not rely on the city’s reserves.
“My budget will not call for dipping into (reserves at) a million dollars per year in (2019-2020) just because we already have that $300,000 out,” he said. “We need to cinch up our belt. We will find it.”
Councilmember Dini Duclos said the city needs to find ways to increase revenue aside from increasing taxes.
“We can’t continue to cut, cut, cut, because we won’t be able to protect our citizens,” she said. “We won’t be able to provide the services they want. We might have to close our parks because we can’t maintain them, so we really need to sit down and strategize about the revenues in the city. It is just like any business. We can’t continue to operate in a deficit or we will go bankrupt.”
Duclos said she would like to see the council meet with the business community to come up with ways to garner more businesses and revenue streams for the city.
Councilmember Martin Moore said he wants to engage the community in the budget process so that there are no surprises when the council votes on the budget later this year.
“That vote that took place on the utility tax taught me that we can always do a better job of getting the public engaged, on utilizing technologies and getting to the public,” Moore said, referring to the more than 200 people who packed council chambers for the vote on the utility tax.
Moore said he would like the city to host town hall meetings about the budget.
“I think there is value in that,” he said. “I know in the city of Kent, the mayor is taking her budget on the road and is talking about that and getting information out on that issue.”
The city has scheduled a special meeting to discuss the budget at 5 p.m. Tuesday, May 29, in City Council Chambers at City Hall, 33325 Eighth Ave. S.
Other budget meetings are set for:
• 5:30 p.m. Tuesday, June 5, special meeting (prior to regular meeting): Budget discussion/presentation – capital replacement
• 5:30 p.m. Wednesday, June 20, special meeting: Budget discussion/presentation – budget goal setting
• 7 p.m. Tuesday, Sept. 4, regular meeting: Mayor presents proposed biennial budget to council
• 5:30 p.m. Wednesday, Sept. 26, special meeting: Budget overview – revenue and expenditure projections and department presentations from Community Development, Public Works and Parks
• 5:30 p.m. Thursday, Sept. 27, special meeting: Department presentations from Municipal Court, Human Resources, City Clerk, Economic Development, Law, Police and Finance
• 5:30 p.m. Tuesday, Oct. 2, special meeting (prior to regular meeting): Department presentations by the council, Mayor’s Office, IT and Emergency Management; council deliberations
• 7 p.m. Tuesday, Oct. 16, regular meeting: Public hearing (required by RCW 35A.34) to consider the 2019-2020 biennial budget/property tax levy
• 6 p.m. Tuesday, Oct. 23, special meeting (if needed): Continue council deliberations
• 6 p.m. Tuesday, Oct. 30, special meeting (if needed): Continue council deliberations
• 7 p.m. Tuesday, Nov. 6, regular meeting: Public hearing continued from Oct. 16 (required by RCW 35A.34); introduction of ordinance for 2019-2020 biennial budget; introduction of ordinance for 2019 property tax levy
• 7 p.m. Tuesday, Nov. 20, regular meeting: Enactment of ordinance for 2019-2020 biennial budget; enactment of ordinance for 2019 property tax levy; resolution for 2019 fee schedule
All meetings are at City Hall. Public comment will be taken at each meeting.